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Why do insurers need a total portfolio view in real time? 


Alan Copping
Senior Market Strategist

Navigating capital, asset liability matching and liquidity complexity

The world of insurance investing is more complicated than ever before. Legacy technology is only compounding the problem. With fragmented systems, it is that much harder for insurers to recalibrate investment strategies to cope with change.  

The shift to rates staying higher for longer means another adjustment in asset allocations on top of insurers grappling with an ever-widening range of asset classes and the operational complexities that come with it. And yet, they currently lack a fully integrated risk management framework that can monitor capital, ALM and liquidity for effective decision making. Achieving this relies on having the right data, at the right time. This means an investment management platform that can deliver information in real-time. 


The race for change: Finding the balance between risk and return 

As insurers run more complex, multi-strategy portfolios that blend public and private assets, they need to have a holistic view of all investments to quickly assess liquidity risk, ensure proper asset-liability matching and be compliant with the latest regulatory/capital requirements. And with increasing regulations, having proper data management and a golden copy is no longer a nice to have for transaction reporting. 

Given the abundance of data points that many organizations now must contend with, the consistency, accuracy and downstream effects of real time information and analytics is critical. 

What if you could optimize your portfolio to meet your liabilities, ensuring your liquidity requirements are met? This means that you can go beyond the pure risk focus and actively seek portfolio growth by effectively optimizing returns. 

The key to liquidity management is to ensure adequate financing to meet liquidity needs, in both normal and stress scenarios. 

“With comprehensive cash flow projections and stress tests to determine the level of liquid assets required to meet net cash outflow needs over multiple time horizons, insurers have a better chance of surviving a crisis and optimizing excess liquidity in normal times.”

Alan Copping

Senior Market Strategist, SimCorp

Answering critical questions to enhance insurers’ decision making

In an era of digital and AI, speed and precision are of the essence. Insurance companies must also be thinking about this new operating reality or risk falling behind. Moving faster demands transparency and tight coordination across the entire investment value chain.  

Imagine one fully integrated investment platform, designed for purpose, for the end-to-end investment lifecycle, operating on the same data, valuations, (public or private market) positions, analytics, performance, cash and all the critical compliance checks with your regulators to deliver clarity to your business and the consistent precision needed for faster time to value.  

It is this single source of truth flowing seamlessly through a series of automated, cost-effective processes that enables a total portfolio view in real time and brings the answer to insurers’ most pressing concerns: 

  • Duration and liquidity: what is your duration risk? Are you protected against interest rate moves? Do you have robust asset-liability management?  
  • Stress testing: how well are you able to model/stress test the robustness and liquidity of your portfolio? How about changes in the volatility/ correlation regime or the impact of geopolitical events and climate change?  
  • Managing assets to liabilities: can you optimize your portfolio to reduce interest rate risk at ease? Not just controlling for overall portfolio duration but at all key rates on the yield curve? 

The path forward

Today, you can rely on one platform with seamless and intuitive workflows throughout the investment lifecycle based on a single source of data, whatever your investment needs. Liability driven investing, private or public market investing, you can manage them all in one place with a true total portfolio view—ensuring that all rules are tested, risks are monitored, and performance is reported on consistently across the investment value chain.  

Looking further ahead, the clear goal for insurers is better integration of new technology – such as AI or improved platforms for investment management and accounting—or risk falling behind. To decrease siloes between technology and investment in order to increase efficiency and productivity, having access to real-time data across the investment value chain is the critical first step.  

Learn how you can achieve a total portfolio view with SimCorp One ➔

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